Monday, December 13, 2010

The SBA and dizen

dizen(DY-zuhn, DIZ-uhn)1. To attire with finery.2. To dress or decorate in a gaudy manner.From Old English dis- (a bunch of flax on a distaff for spinning).‘Tis the season for dizen_____________________________________________________

TIP OF THE WEEK

The increased guaranty and guaranty fee waiver for SBA 7(a) loans is scheduled to expire December 31, 2010.

SBA released an information notice indicating that most 7(a) loans should be submitted by December 15th.________________________________________Indices:PRIME RATE= 3.25%SBA LIBOR Base Rate December 2010 = 3.27%SBA Fixed Base Rate December 2010 = 5.77%________________________________________________504 Debenture Rate for NovemberThe debenture rate is 3.25% but note rate is 3.30% and effective yield is only 5.102%.________________________________________________AHEAD OF THE YIELD CURVE

The Federal Reserve Open Market Committee meets tomorrow.

Last month when they met they said that interest rates would remain “exceptionally low” for “extended period.”

One of the reasons the Fed is keeping rates low is because of “low rates of resource utilization.” Keep your eyes and ears open for Wednesday’s release on capacity utilization. This is one of the Federal Reserve’s favorite measures of inflationary expectations. Back in September it had dropped for the first time in almost a year. Last month it was flat.

The Federal Reserve also said that it would buy $600 billion of U.S. government debt to spur job growth and avoid deflation.

The Fed said it will focus about 86 percent of its purchases in notes due in 2.5 years to 10 years. As a result, the 30 year Treasury bond has become the benchmark for the world’s biggest debt investors. The 30 year Treasury bond will also be the only government debt that most closely reflects market expectations for inflation and future growth.

Since the Fed’s November 3rd announcement about these debt purchases, the 30-year yield has risen about ¼ percentage point. The interest rate on the 30 year bond has risen about 100 percentage points from a 17-month low of 3.46 percent August 25th.

The 30-year bond yield was little changed at 4.39 percent Friday after dropping six basis points Thursday, when the $13 billion U.S. sale of the debt drew the highest demand since August. The yield increased to the seven-month high of 4.50 percent on December 8th, making it extremely attractive to Treasury bond investors. Back in April it was up to 4.77 percent.

The bond’s average yield was 4.49 percent from Dec. 31, 2007, through Sept. 12, 2008, just before the collapse of Lehman Brothers.

It is now at 4.44 percent.

Here is what the 30 year bond has been doing:2001- 5.492002- 5.432003- ND2004- ND2005- ND2006- 4.912007- 4.842008- 4.182009- 3.892010- 4.61

What a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know.

Fed policy makers may signal tomorrow that they are open to boosting debt purchases beyond the $600 billion already announced.

It would appear that the savings from low variable rates of interest should continue for an "extended" period._________________________________________________OFF BASE

There are exactly twelve days until Christmas. Does that mean the twelve days of Christmas start today?

Not quite. It’s not the twelve days before Christmas, but the twelve days after Christmas. It ends on January 6th on what is known as the Epiphany (with a big E) which celebrates when the three wise men came with gifts for the baby Jesus. This day was once as celebrated as Christmas.

If Christmas is almost here, that means the first day of winter is almost here. It is also the shortest day of the year. In ancient times, the winter solstice was observed with much more fervor than it is today. Centuries ago in some cultures, elaborate festivals were held. Alarmed by the colder weather, shorter days with less and less sunlight, and long, dark nights, some were convinced that they had done some terrible wrong and as punishment, the sun was leaving the sky never to return. Large bonfires were lit with rituals held pleading to whatever god they believed in to make the sun return. These solstice festivals evolved into Christmas as we now know it.

Is There a Santa Claus?Is There a Santa Claus? was the title of an editorial appearing in the September 21, 1897 edition of the New York Sun. The editorial, which included the famous reply "Yes, Virginia, there is a Santa Claus", has become an indelible part of popular Christmas lore in the United States. Here is the editorial:"DEAR EDITOR: I am 8 years old."Some of my little friends say there is no Santa Claus."Papa says, 'If you see it in THE SUN it's so.'"Please tell me the truth; is there a Santa Claus?"VIRGINIA O'HANLON."115 WEST NINETY-FIFTH STREET."

VIRGINIA,your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except [what] they see. They think that nothing can be which is not comprehensible by their little minds. All minds, Virginia, whether they be men's or children's, are little. In this great universe of ours man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that's no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.You may tear apart the baby's rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.No Santa Claus! Thank God! he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.